MILWAUKEE – In an attempt to move the Chapter 11 bankruptcy closer to resolution, attorneys for the Archdiocese of Milwaukee filed a “motion for withdrawal of the reference” Tuesday, May 15, through the U.S. Bankruptcy Court for the Eastern District of Wisconsin, which will be granted or denied by the U.S. District Court for the Eastern District of Wisconsin.
In part, the attorneys’ memorandum of law in support of the motion states, “The debtor (archdiocese) requests that this court grant the motion and withdraw the reference for a determination of the summary judgment motions on the new objections and consolidate these matters with the appeals.”
The “new objections” were the seven filed by the archdiocese April 26. Three objections were filed in November 2011 and are pending before U.S. District Court Judge Rudolph T. Randa.
Archdiocesan attorneys noted in the memorandum that in waiting for resolution of the original and new objections, “the litigation regarding the assets is ongoing and will continue to diminish the debtor’s estate.”
As an example they cited the litigation regarding “ownership of millions of dollars currently held in a cemetery trust has been ongoing for 10 months and at cost to date that is approaching a million dollars for discovery and litigation.”
Since the district court is already familiar with “many of the facts and issues raised in the new objections,” the attorneys wrote, withdrawing the reference for the new objections “will promote judicial economy, conserve resources, expedite the bankruptcy process, and reduce confusion for the parties.”
In their memorandum, the attorneys, noting that issues found in the original and new objections also exist in the claims (tort claims) filed by approximately 575 claimants, said that “a ruling on the law applicable to the new objections will be instructive for the parties on the remaining tort claims.”
They continued, “This information will be beneficial to the parties as they proceed with other aspects of this case because it will instruct the parties regarding what treatment the tort claims might receive in the reorganization and will instruct the parties on the scope of the inquiry into the assets of the debtor.”
In a letter to recipients of his weekly Love One Another communiqué, Archbishop Jerome E. Listecki explained the decision to seek having the “objection to claim” motion heard and decided by the district court.
Noting that it has been nearly a year and a half since the archdiocese filed its Chapter 11 petition, filing the motion for withdrawal of the reference “will speed up the case and promote judicial efficiency,” the archbishop wrote. He added that having the district court decide on the claims will “save money.”
“Without a definitive decision, the Chapter 11 proceeding will continue to languish while precious resources – both time and money – disappear,” Archbishop Listecki wrote. “The archdiocese has limited resources and the longer it takes to determine what claims are eligible, the less money will be available.”
The archbishop said the motion “would put an end to the confusion about which claims are eligible for compensation” – a point the archdiocese has emphasized throughout the process.
Jerry Topczewski, Archbishop Listecki’s chief of staff, said that getting the objections to claims decided was “the most important thing in the proceedings.”
“We’re saying we can’t wait another four to five months to get it decided just to have them appealed, which will be another couple of months,” he told your Catholic Herald. “So why not leapfrog the step and do it? That’s the gist of it.”
Topczewski said that if the district court would decide on the claims, the archdiocese would receive an answer to what it deems “the most important question in the case at this point in the proceeding, which is: How many claims are eligible?”
He added that when the archdiocese knows who is eligible, it can develop its reorganization plan, but that funding for that plan can’t be determined until claim eligibility is determined.
“The only way we can get out of bankruptcy is with a plan of reorganization. The only way to successfully put together a plan of reorganization is to discuss it and negotiate it with the creditors’ committee,” Topczewski said. “For us, the only way to successfully discuss it and negotiate it with the creditors’ committee is to have somebody to have said, ‘These claims are in or out.’ From there, we can negotiate.”
The archbishop reiterated his commitment to providing “therapy and counseling for abuse survivors of diocesan priests, regardless of whether their claim in eligible for compensation in the Chapter 11 proceeding….” He said he would agree to a plan of reorganization only if it contained that provision.
“The archdiocese will ask the court to allow us to create a fund that would provide resources for therapy and counseling as long as such a need exists,” he wrote. “We do this not because we are required to do so, but because our faith calls us to do so. I will insist that our ability to continue counseling and therapy for abuse survivors remains intact.”
Attorneys for the claimants have 14 days in which to file an objection to the archdiocese’s motion.
